Google has unveiled Android Pay, a contactless payment system that rivals Apple Pay

Google has stepped up its rivalry with Apple by announcing its own contactless payment system and revamping the Android Wear smartwatch.

The search giant unveiled Android Pay at its annual I/O conference in San Francisco on Thursday, which will allow people to pay for items in shops via their mobile phones.

Android phone users will be able to use the technology, known as Near Field Communications, in more than 700,000 stores in the US, including McDonald’s and Macy’s, after linking their credit card to the new service, Google said.

“Just unlock your device, hold it up to a reader, and you’re done. There is no need to open an app,” said Dave Burke, vice-president of engineering.

To counter security fears, Android Pay can be used with fingerprint recognition software. The system also passes numbers between the customer and store that relate to a person’s credit card details but not the card number itself.

“Android Pay is focused on simplicity, security and choice,” Mr Burke added. “Your credit card number is not shared with the store.”

The technology, which replaces Google Wallet, comes after Apple launched a similar system last year. The iPhone maker has already launched the service in the US and is expected to roll it out to the UK and Europe later this year.

Google is also updating its Android Wear smartwatch. Users will be able to flick their wrists to skip pages or see their next text message, for example, and draw emojis to send to friends. Certain apps, such as fitness trackers, will also keep the watch on, so users can regularly check the device for the latest information without having to turn it back on.

Another new product, Now On Tap, will give Android phone users information about whatever is on their screen, when they press the Home button. So, if you get a text message from a friend suggesting you see a new film, pressing the Home button will bring up information about that movie.

Google also plans to introduce a “Buy Now” button to its search results so internet shoppers can buy products directly, bypassing other sites.

Clicking the Buy Now button next to a shopping search result would link to a Google transaction page where users would complete the purchase.